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The 

Country 
and  the 
Railroads 


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AN  ADDRESS 

BY 

W.  C.  BROWN 

President  Elect  New  York  Central  Lines 

DELIVERED  AT  THE 

SEVENTH  ANNUAL  DINNER 

OF  THE 

ALBANY,  N.  Y.,  CHAMBER  OF  COxMMERCE 
Albany,  N.  Y.,  January  7,  1909 


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The  Country  and  the 
Railroads 


Digitized  by  the  Internet  Archive 
in  2018  with  funding  from 

University  of  Illinois  Urbana-Champaign  Alternates 


https://archive.org/details/countryrailroadsOObrow 


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IJ^ 


5-''^ 


The  Country  and  the  Railroads 

By  W.  C.  Brown 


I  am  very  glad  indeed  to  have  the  opportunity  of  meeting 
this  representative  gathering  of  the  business  men  of  the 
capital  city  of  the  Empire  State.  I  am  glad  to  speak  here, 
because  Albany  may  very  properly  claim  to  be  the  birthplace 
of  the  steam  railroad.  , 

The  Hon  Stephen  Van  Rensselaer,  of  Albany,  was  one 
of  the  first  influential  Americans,  if  not  the  first,  to  actively 
and  intelligently  advocate  steam  railroad  construction.  The 
Mohawk  and  Hudson  Railroad,  chartered  in  1826,  with  Albany 
as  its  initial  point,  was  the  first  steam  railroad  chartered  that 
actually  consummated  the  purpose  of  its  charter.  This  road, 
which  was  the  inception  of  what  is  now  the  New  York  Central 
lines,  was  opened  for  traffic  between  Albany  and  Schenectady 
in  1831. 

The  new  member  of  the  family  of  nations,  called  the  United 
States  of  America,  whose  independence  had  been  won  on  the 
battle  fields  of  the  Revolution,  was  tardily  and  reluctantly 
recognized  by  the  mother  country  as  an  independent  state  on 
November  30th,  1782. 

At  this  time  the  population  of  the  country,  something  less 
j  than  three  millions,  of  whom  about  half  a  million  were  slaves, 

^  was  located  upon  and  closely  adjacent  to  the  shores  of  the 

-  '  Atlantic  ocean,  extending  back  into  the  interior  perhaps  an 
^  average  of  100  miles. 

-c  In  some  cases,  settlement  had  followed  the  course  of  navi- 
gable  rivers  two  or  three  hundred  miles  westward;  but  land 
~  located  more  than  one  hundred  miles  from  the  coast  or  a 
navigable  river,  was  almost  worthless,  as  the  cost  of  trans¬ 
porting  the  products  of  the  soil  exceeded  the  price  at  which 
i‘  such  products  could  be  sold  at  the  distant  market. 


4 


During  the  first  decade  following  the  recognition  of  the 
independence  of  the  colonies  the  tide  of  population  had  pushed 
farther  and  farther  westward.  The  western  slope  of  the 
Allegheny  ^Mountains  and  the  rich  valley  of  the  Ohio  were 
being  peopled  with  a  vigor  characteristic  of  the  Anglo-Saxon 
race ;  and  it  became  evident  that  at  no  distant  date  a  large 
population  and  no  inconsiderable  portion  of  the  wealth  of  the 
nation  would  be  so  located  as  to  make  trade  relations  with  the 
Atlantic  seabord  exceedingly  difficult,  if  .not  impossible.  At 
the  same  time,  practicable  and  convenient  transportation  to 
the  Gulf  by  way  of  the  Ohio  and  ^^lississippi  rivers  would 
favor  trade  relations  with  the  foreign  nation  then  controlling 
the  territory  at  the  mouth  of  the  ^lississippi.  This  condition 
involved  non-intercourse  and  estrangement  on  the  one  hand 
and  growing  and  strengthening  alliances  on  the  other,  which, 
long  continued,  must  inevitably  have  become  a  menace  to  the 
peace  and  perpetuity  of  the  nation. 

The  absolute  necessity  for  better  transportation  facilities  had 
early  engaged  the  attention  of  General  Washington.  Some 
time  before  the  outbreak  of  the  Revolutionary  war,  he  crossed 
the  Allegheny  ^fountains  for  the  purpose  of  ascertaining  the 
feasibility  of  constructing  a  canal  from  the  navigable  waters 
of  the  Chesapeake  to  the  Ohio ;  and,  as  a  member  of  the  House 
of  Burgesses  of  Virginia,  he  urged  upon  that  body  the  earnest 
consideration  of  the  proposition. 

During  the  war  this  important  subject  continued  on  his 
mind,  and  he  made  a  trip  up  the  iMohawk  valley  to  the  summit 
of  the  watershed,  near  Rome,  from  which  the  waters  flow 
into  the  Hudson  river  on  the  one  hand  and  into  Lake  Ontario 
on  the  other,  and  where  nearly  a  century  later  were  to  be 
realized  to  their  full  extent  the  work  and  advantages  he  so 
earnestly  sought  to  secure  to  his  own  State. 

In  a  letter,  at  once  an  epic  and  a  classic,  written  in  1784,  to 
Benjamin  Harrison,  General  Washington  earnestly  and  almost 
passionately  voices  his  appeal  for  binding  together  a  frag¬ 
mentary  nation  by  those  strong  ties  of  interstate  union  and 
commerce.  In  this  letter  he  writes ; 


5 


“  No  well  informed  mind  need  be  told  that  the  flanks 
and  rear  of  the  United  Territory  are  possessed  by  other 
powers,  and  formidable  ones,  too ;  nor  how  necessary  it 
is  to  apply,  the  cement  of  interest  to  bind  all  parts  of  it 
together  by  one  indissoluble  bond,  particularly  the  Aliddle 
States  with  the  country  immediately  back  of  them. 

“  The  way  is  plain  and  the  expense,  comparatively 
speaking  deserves  not  a  thought,  so  great  would  be  the 
prize.  The  western  inhabitants  would  do  their  part 
toward  accomplishing  it  Weak  as  they  are  now,  they 
would,  I  am  persuaded,  meet  us  half  way,  rather  than 
be  driven  into  the  arms  of,  or  be  in  any  wise  dependent 
upon,  foreigners ;  the  consequence  of  which  would  be  a 
separation  or  a  war.  The  way  to  avoid  both,  happily  for 
us,  is  easy  and  dictated  by  our  clearest  interest.  It  is  to 
open  a  wide  door  and  make  a  smooth  way  for  the  produce 
of  that  country  to  pass  to  our  markets  before  the  trade 
may  get  into  another  channel. 

“  That  it  is  better  to  prevent  an  evil  than  to  rectify 
a  mistake  none  can  deny.  Commercial  connections,  of 
all  others,  are  most  difficult  to  dissolve.  If  we  wanted 
proof  of  this,  look  to  the  avidity  with  which  we  are 
renewing,  after  a  total  suspension  of  eight  years,  our 
correspondence  with  Great  Britain.  So,  if  we  are  supine 
and  sutler  without  a  struggle  the  settlers  of  the  western 
country  to  form  other  commercial  connections,  we  shall 
find  it  a  difficult  matter  to  dissolve  them,  although  a 
better  communication  should  thereafter  be  presented  to 
them.  Time  alone  could  efifect  it,  such  is  the  force  of 
habit.” 

This  letter,  wonderful  in  its  clear-visioned,  prophetic  and 
patriotic  foresight,  was  our  nation’s  earliest  bugle  call  to  the 
better  days  to  come,  of  improved  canal  and  river  navigation. 
It  was  the  first  splendid  dream  of  that  tremendous  march  of 
settlement,  civilization  and  development  heralded  by  the 
national  highway  and  the  canal,  that  later  reached  its  full 
realization  in  the  continent-wide  construction  of  the  railroad. 

From  the  first  visit  of  Washington  to  the  Mohawk  valley 
there  was  continuous  agitation  of  the  project  for  water  con¬ 
nection  between  T  ake  Erie  and  the  Hudson  river,  and  in  1792 
the  Western  Inland  Navigation  Company  was  incorporated  lor 
the  purpose  of  establishing  lock  navigation  from  the  Hudson 
river  to  Lake  Ontario;  and  improvements  were  made  by  this 


6 


company  to  allow  the  passage  of  boats  of  fifteen  tons  burden 
from  the  Mohawk  river  to  Oneida  lake.  The  limited  capacity 
and  imperfect  construction  of  these  improvements,  however, 
rendered  them  almost  valueless. 

In  i8io  a  commission  was  organized  by  the  Legislature  of 
New  York  State  to  examine  the  route  of  the  Western  Inland 
Navigation  Company  and  the  improvements  thereon.  The 
commission  made  a  report  recommending  that  five  million 
dollars  be  appropriated  for  a  canal,  and  that  the  enterprise  be 
offered  to  the  Federal  government.  This  offer  was  rejected 
and,  the  War  of  1812  soon  following,  all  work  was  suspended 
until  a  return  of  peace.  This  war,  however,  had  one  effect  of 
perhaps  more  value  than  the  victory  itself,  in  that  it  aroused 
the  nation  to  the  imperative  necessity  of  welding  into  one  its 
disjointed,  widely  separated  parts  by  immediately  improving 
the  means  of  transportation  from  the  seaboard  to  the  west. 
In  1816  a  Board  of  Commissioners  was  appointed  by  the  State 
of  New  York  to  consider  the  subject  of  improved  internal 
transportation.  This  board  reported  at  length  to  the  Legisla¬ 
ture,  and  on  April  15th,  1817,  an  act  was  passed  authorizing 
the  construction  of  a  canal  between  the  great  northern  lakes 
and  the  Atlantic  ocean.  The  requisite  appropriations  were 
made ;  the  work  of  construction  was  commenced  near  the 
village  of  Rome  on  the  4th  day  of  July,  1817;  and  the  union 
of  the  waters  of  the  great  lakes  and  the  ocean  was  effected 
in  October,  eight  years  later. 

The  cost  of  the  Erie  canal  approximated  $8,000,000,  at  that 
time  a  tremendous  undertaking,  and  to  the  credit  of  the  State 
of  New  York  be  it  said  that  she  bore  this  burden  alone. 
Appeals  for  aid  to  Ohio,  Michigan,  and  other  middle  western 
states  that,  in  the  years  to  come,  were  to  be  benefited  in  much 
larger  measure  than  the  State  of  New  York,  were  in  vain; 
and  without  assistance  and  with  scant  sympathy  from  sister 
states,  the  Empire  State  assumed  the  burden. 

By  the  building  of  that  canal  the  cost  of  transportation  of 
freight  from  Buffalo  to  Albany  was  reduced  from  the  almost 
prohibitive  figure  of  more  than  one  hundred  dollars  per  ton  to 
approximately  twelve  to  fourteen  dollars  per  ton. 


7 


Less  than  a  decade  later,  however,  railroads  were  built  along 
the  canal  —  five  short  lines,  without  physical  connection  for 
handling  through  traffic.  Later,  men  who  had  faith  in  the 
future  of  the  great  Middle  West  and  appreciated  its  needs, 
consolidated  and  connected  these  lines,  making  a  through  line 
of  them.  Measured  by  present  standards,  the  consolidated 
road  was  not  much  of  a  railroad,  but  within  five  years  from 
the  inauguration  of  through  service,  it  had  so  cheapened  the 
cost  of  transportation  that  it  threatened  to  put  the  canal  out 
of  business  entirely ;  and  one  of  the  most  bitter  political  cam¬ 
paigns  in  the  history  of  the  State  of  New  York  was  an  effort 
to  force  the  railroad  to  raise  its  rates  to  a  figure  that  would 
permit  the  canal  to  compete  for  any  kind  of  freight.  This 
contingency  was  not  altogether  unexpected.  The  report  of 
the  Assembly  committee,  to  which  was  referred  in  1826  the 
question  of  granting  a  charter  for  the  Mohawk  and  Hudson 
Railroad,  says : 

“  The  only  objection  that  occurs  to  the  committee 
against  the  incorporation  of  the  petitioner  is  the  possi¬ 
bility  of  its  reducing  the  tolls  on  the  Erie  canal.” 

The  average  cost  of  handling  a  ton  of  freight  from  Buffalo 
to  Albany  is  fifty  times  less  than  it  was  before  the  construc¬ 
tion  of  the  canal,  and  ten  times  less  than  it  was  by  the  canal 
before  the  railroad  made  its  beneficent  influence  felt. 

In  1855  the  average  freight  rate  on  the  New  York  Central 
had  been  reduced  to  thirty-eight  mills  per  ton  per  mile ;  in 
1907  it  was  six  mills. 

The  railroads  comprising  the  “  New  York  Central  Lines,” 
the  successor  of  the  Mohawk  and  Hudson  Railroad,  now  have 
a  mileage  of  12,282  miles,  which,  if  extended  in  a  direct  line, 
would  half  encircle  the  globe.  An  army  of  143,500  men  is 
employed,  exceeding  in  number  the  army  and  navy  of  the 
United  States  by  more  than  30,000,  and  earning  about 
$110,110,000  per  annum.  Out  of  $241,456,944  of  annual 
earnings  in  1907,  $217,000,000,  or  71  per  cent,  was  immediately 
paid  out  for  wages,  taxes,  interest,  and  in  the  purchase  of 
equipment  and  material. 

The  railroads  of  the  entire  country  employed  in  1907  nearly 


8 


1,700,000  men;  and,  based  on  the  accepted  rule  for  estimating 
population,  supported  directly  approximately  eight  million 
people. 

This  army  of  men  carried  on  the  pay-rolls  of  the  railroads 
of  the  United  States  almost  exactly  equals  in  number  the 
standing  armies  of  Great  Britain,  Germany,  France  and  Japan 
combined,  and  receives  in  wages  an  aggregate  of  more  than 
one  billion  dollars  per  annum. 

The  gross  earnings  of  the  nation’s  railways  in  1907 
amounted  to  approximately  two  billion,  five  hundred  and 
eighty-six  million  dollars,  or  more  than  $7,000,000  for  each  of 
the  365  days  of  the  year.  If  the  railroads  could  have  held  in 
their  treasuries  the  money  they  earned  in  1907,  January  ist, 
1908,  would  have  found  the  country  bare  of  money;  for  prac¬ 
tically  every  dollar  in  circulation  in  the  United  States,  gold, 
silver,  paper,  nickel  and  copper,  passes  through  their  treasuries 
each  year.  This  being  the  case,  it  is  interesting  to  see  how 
this  vast  sum  of  money  is  disposed  of  —  what  becomes  of  it. 

Out  of  each  one  hundred  dollars  earned,  forty  dollars  is 
directly  and  immediately  paid  out  to  employes  on  the  pay¬ 
rolls  of  the  railroads.  Eight  dollars  is  paid  for  fuel,  waste, 
oil  and  water,  and  seven  of  the  eight  goes  to  pay  for  labor 
required  to  produce  these  supplies.  Eighteen  dollars  is  paid 
for  steel  rails,  ties,  cars,  engines,  structural  steel,  stationery 
and  thousands  of  other  things  necessary  in  the  operation  of  a 
railroad.  Of  this  eighteen  dollars,  approximately  sixteen  goes 
for  labor. 

Five  dollars  is  paid  for  permanent  improvements,  such  as 
additions  to  yards,  additional  tracks,  additions  and  extensions 
of  shops,  roundhouses  and  the  like ;  and  four  of  the  five 
dollars  is  paid  for  labor. 

Three  dollars  goes  to  pay  taxes ;  two  dollars  for  rent  of 
terminals,  joint  track,  etc. 

Fourteen  dollars  is  paid  as  interest  on  bonds,  which  repre¬ 
sent  money  borrowed  for  original  construction  or  subsequent 
improvements ;  and  this  sum  amounts  to  less  than  an  average 
of  four  per  cent  on  the  face  value  of  the  bonds. 

Nine  dollars  goes  to  the  owners  of  the  railroads  —  the 


9 


shareholders  —  representing  less  than  four  per  cent  on  the 
face  value  of  the  stock. 

One  dollar  is  put  into  the  surplus  fund  to  provide  for  neces¬ 
sary  improvements  to  the  property  and  as  a  reserve  against 
periods  of  hard  times. 

Approximately  seventy-one  dollars  out  of  every  one  hun¬ 
dred  dollars  earned  by  the  railroads  of  the  country  is,  there¬ 
fore,  almost  immediately  paid  out  for  labor,  or  for  equipment 
and  material  of  which  labor  forms  by  far  the  largest  com¬ 
ponent  part. 

During  the  ten  years  from  1897  to  1907  the  United  StatesV.^ 
has  enjoyed  an  almost  continuous  and  uninterrupted  advance 
in  prices  of  the  product  of  its  farms,  factories  and  mines. 
\\dth  a  succession  of  bountiful  harvests,  farm  products,  corn, 
oats,  rye,  barley,  buckwheat,  hay  and  potatoes  show  an 
average  increase  in  price  in  1907  of  71^  per  cent  over  those 
of  1897. 

With  a  full,  normal  increase  and  no  disease  or  epidemic  to 
deplete  our  flocks  and  herds,  values  have  increased  marvel¬ 
ously.  Notwithstanding  the  advent  of  the  automobile,  the 
price  of  horses  and  mules  was  150  per  cent  higher  in  1907 
than  in  1897.  The  price  of  milch  cows  in  1907  was  32  per 
cent  higher,  that  of  sheep  113  per  cent  higher,  and  that  of 
swine  47  per  cent  higher  than  in  1897. 

The  products  of  the  forests  make  an  equally  marvelous 
showing:  Pine,  hemlock,  oak,  poplar,  cedar,  ash  and  chestnut 
sold  in  1907  at  an  average  price  57  per  cent  higher  than  in 
1897. 

Our  Southern  neighbors  have  shared  in  full  measure  in  these 
enhanced  values:  r^Iiddling  cotton  shows  increase  in  price  of 
72.9  per  cent;  standard  sheeting,  61. i  per  cent;  standard 
drilling,  60.4  per  cent;  bleached  sheeting,  40.5  per  cent;  stand¬ 
ard  prints,  27.7  per  cent. 

Ohio  fleece  wool  in  the  eastern  market  shows  an  increase  of 
from  78.9  to  89.5  per  cent. 

Anthracite  coal  shows  increase  in  price  of  28.6  per  cent; 
bituminous,  55.5  per  cent;  lard,  108. i  per  cent;  pork,  99  per 
cent;  tallow,  88.8  per  cent. 


I 


10 

During  this  time  farm  land  in  all  portions  of  the  West  and 
Middle  West  has  fully  doubled  in  value. 

This  great  increase  in  the  cost  of  things  has  affected  the 
railroad  directly  and  severely.  Comparing  the  prices  of  1907 
with  those  of  1897  on  a  few  articles  used  in  great  quantities 
by  the  railroads,  the  following  large  increases  are  shown: 
Fuel,  38  per  cent;  ties,  76.4  per  cent;  steel  rails,  47.4  per  cent; 
angle  bars,  52  per  cent;  gray  iron  castings,  46.9  per  cent;  bar 
iron,  47.9  per  cent;  cast  iron  pipe,  62.8  per  cent;  track  spike, 
37.3  per  cent ;  cast  iron  wheels,  39.2  per  cent ;  barbed  wire, 
47.1  per  cent;  bridge  timber,  77.3  per  cent;  car  axles,  41.4  per 
cent;  locomotive  steel  forgings,  45.4  per  cent;  stationery, 
paper,  etc.,  20  per  cent;  locomotives,  50  per  cent;  cars,  72 
per  cent. 

Labor  shows  an  average  increase  of  approximately  30  per 
cent. 

If  the  material  used  in  1907  by  the  railroads  of  the  United 
States,  in  operation  and  maintenance  alone,  could  have  been 
purchased  at  the  prices  of  1897,  it  would  have  resulted  in  a 
saving  of  approximately  $176,500,000. 

If  the  labor  actually  employed  by  the  railroads  in  1907,  in 
operation  and  maintenance,  had  been  paid  on  the  wage  scale 
of  1897,  this  item  would  have  cost  $^54,000,000  less  than  it  did. 
If  the  taxes  of  1907  had  been  at  the  same  rate  per  mile  of  road 
as  in  1897,  the  railroads  of  the  country  would  have  paid 
$26,800,000  less  taxes  than  they  did  in  1907. 

If  the  locomotives,  cars,  rails,  ties,  etc.,  purchased  in  1907 
for  additions  and  improvements  and  charged  to  capital 
account,”  could  have  been  bought  at  the  prices  of  1897,  they 
would  have  cost  $219,100,000  less  than  they  did,  and  the 
bonded  debt  of  the  roads,  on  which  interest  must  be  paid, 
and  for  the  retirement  of  which  at  maturity  funds  must  be 
provided,  would  be  that  much  less;  and  these  figures  do  not 
include  the  increased  cost  of  labor  employed  in  making  these 
improvements. 

The  money  raised  by  railroads  for  extensions  and  improve¬ 
ments  in  1897  was  obtained  at  an  average  interest  rate  of  3.90 


11 


per  cent,  while  the  average  rate  of  interest  in  1907  was  4.62 
per  cent,  or  an  increase  of  18.46  per  cent. 

Let  us  look  at  the  other  side  of  the  ledger  and  see  what  the 
railroads  have  been  able  to  secure  in  the  way  of  increased 
rates  to  offset  these  tremendous  increases  in  cost. 

In  a  communication  under  date  of  May  i8th,  1907,  Mr. 
J.  M.  Glenn,  secretary  of  the  Illinois  Manufacturers’  Associ¬ 
ation,  stated  that  the  rates  had  been  advanced  on  more  than* 
800  articles ;  that  by  changes  in  classification  many  “  lake  and 
rail  rates  ”  had  been  substantially  increased ;  and,  in  a  general 
way,  challenged  my  statement  that,  considered  as  a  whole, 
rates  in  Central  Traffic  and  Trunk  Line  territory  had  been 
reduced. 

I  could  not  answer  Mr.  Glenn’s  statement;  there  was  not  a 
traffic  officer  in  the  United  States  at  that  time  that  could ;  and 
it  is  only  after  ten  months  of  the  most  thorough,  painstaking 
investigation  and  analysis  that  it  is  possible  to  answer  it  now. 

Mr.  Glenn  was  right  in  stating  that  during  the  last  ten  years 
increases  have  been  made,  by  changes  in  the  classification,  in 
the  freight  rates  on  approximately  800  articles.  To  be  exact, 
in  the  ten  years  from  1898  to  1908,  rates  have  been  advanced 
in  this  manner  on  897  articles.  But,  during  the  same  period, 
rates  have  been  reduced,  by  changes  in  classification,  on  876 
articles;  and  the  net  result  in  money  on  the  1,773  articles  on 
which  changes  in  rates  have  been  made  was  a  reduction  of 
10.69  cent. 

Concisely  stated,  if  the  railroads  could  have  purchased  the 
material  and  equipment  used,  and  obtained  the  labor  employed, 
in  the  year  1907,  on  the  basis  of  prices  and  scale  of  wages  in 
effect  in  1897,  their  cost  of  operation,  plus  the  cost  of  improve¬ 
ments  and  extensions,  would  have  been  approximately 
$676,000,000  less ;  and  had  they  received  for  doing  the  busi¬ 
ness  of  1907  the  rates  of  1897,  their  earnings  would  have  been 
approximately  $90,000,000  greater  than  they  were. 

Facts  of  this  character  furnish  their  own  argument.  Fig¬ 
ures  such  as  these  require  no  elaboration  . 

These  are  the  conditions  with  which  the  railroads  of  the 
country  have  had  to  contend  during  the  last  ten  years,  and  the 


12 


conditions  that  confront  them  to-day.  These  are  the  facts  that 
must  be  frankly  spread  before  investors  to  whom  we  are  trying 
to  sell  securities  to  obtain  money  for  necessary  improvements. 

j\Ir.  Toastmaster,  this  hasty  review  of  some  of  the  past 
history  and  the  present  condition  of  the  transportation  busi¬ 
ness  of  the  country  suggests  an  incpiiring  glance  into  the 
future. 

Wdiat  is  to  be  the  development,  the  growth,  of  agriculture, 
of  merchandising,  of  manufacturing  and  of  mining  during 
the  first  quarter  of  the  new  century?  What  will  be  the  popu¬ 
lation  of  this  country  at  the  end  of  that  period?  *  What  will 
be  required  in  the  way  of  increased  transportation  facilities, 
and  how  will  these  increased  facilities  be  supplied? 

During  the  fifteen  years  from  1892  to  1907  the  railroad 
mileage  of  the  United  States  increased  from  175,170  miles  to 
225,584  miles,  an  increase  of  50,414  miles.  The  population 
increased  almost  21,000,000.  The  production  of  anthracite 
coal  rose  from  45,000,000  in  1892  to  63,000,000  tons  in  1907, 
an  increase  of  nearly  20,000,000  tons ;  bituminous  coal  from 
105,268,000  to  306,138,000  tons,  an  increase  of  more  than 
200,000,000  tons ;  while  the  production  of  pig  iron  shows  an 
increase  of  181  per  cent  and  that  of  steel  374  per  cent. 

During  this  period  the  annual  production  of  corn  increased 
from  1,628,464,000  bushels  in  1892  to  2,592,320,000  bushels 
in  1907,  an  increase  of  almost  1,000,000,000  bushels;  that  of 
cotton  from  9,000,000  bales  to  13,500,000  bales,  an  increase  of 
approximately  4,500,000  bales ;  while  cattle,  horses,  sheep, 
mules  and  swine  increased  more  than  35,000,000  in  number. 

The  wealth  of  the  nation  increased  from  sixty-five  billion  to 
one  hundred  and  seven  billion  dollars,  an  increase  of  about 
forty-two  billions  of  dollars. 

Vast  as  these  increases  are,  I  doubt  if  they  represent  a  fair 
average  for  fifteen  years,  and  certain  it  is  that  they  fall  short 
of  approximating  the  probable  increase  of  the  fifteen  years 
to  come. 

During  the  fifteen  years  ending  with  the  year  1907,  it  must 
be  remembered  that  the  country  passed  through  one  of  the 
most  disastrous  panics  in  its  history ;  and  that  the  great  ques- 


13 


tion  of  free  silver,  the  maintenance  of  the  national  honor  and 
credit,  was  fought  out  and  righteously  settled. 

Accepting  these  figures,  however,  as  a  basis  for  computation, 
the  end  of  the  first  quarter  of  this  century  will  see  a  population 
in  this  country  approximating  one  hundred  and  twenty-five 
million  people.  The  production  of  anthracite  coal  at  that  time 
will  have  increased  to  approximately  ninety  million  tons  per 
annum,  as  compared  with  sixty-three  million  tons  in  1907; 
that  of  bituminous  coal  to  892,000,000  tons  as  compared  with 
the  present  output  of  306,138,000  tons;  that  of  pig  iron  to 
more  than  72,000,000  tons  as  compared  with  25,781,000  tons 
produced  in  1907;  and  that  of  steel  to  more  than  111,000,000 
as  compared  with  23,000,000  tons  produced  in  1907.  The  pro¬ 
duction  of  cotton,  which  was  13,500,000  bales  in  1907  will  have 
reached  more  than  20,000,000  bales  annually;  that  of  wheat 
nearly  800,000,000  bushels  as  compared  with  634,000,000 
bushels  in  1907;  and  the  production  of  corn,  which  in  1907 
was  2,592,320,000  bushels,  in  1925  will  exceed  4,000,000,000. 

Farm  animals,  horses,  sheep,  mules,  swine,  will  have  been 
increased  in  number  by  approximately  50,000,000,  and  by  more 
than  $3,250,000,000  in  value. 

The  total  national  wealth  will  have  increased  to  approxi¬ 
mately  one  hundred  and  seventy-seven  billions  of  dollars  as 
compared  with  one  hundred  and  seven  billion,  one  hundred  and 
four  million,  two  hundred  and  eleven  thousand  dollars  in  1907. 

These  figures,  especially  as  they  relate  to  farm  products 
suggest  the  inquiry  whether  or  not  such  tremendous  increase 
in  production  is  possible  in  view  of  the  diminishing  amount  of 
unimproved  land. 

Xearly  all  my  active  life  has  been  spent  in  the  \\  est,  and  I 
have  made  something  of  a  study  of  the  question  of  reclamation 
of  arid  lands  by  irrigation.  I  have  also  given  some  attention 
to  the  possibility  of  increasing  the  productiveness  of  land 
already  under  cultivation,  by  the  careful  selection  of  seed  and 
by  the  application  of  improved  methods  of  fertilization  and 
cultivation ;  and  I  do  not  hesitate  to  say  that  by  these  means 
alone  our  cereal  crops  can  be  doubled  (without  adding  an 
acre  to  the  land  now  under  cultivation).  In  this  connection 


14 


it  should  be  borne  in  mind  that  under  the  recently  enacted 
laws  for  the  reclamation  of  arid  lands,  millions  of  acres  now 
sterile  and  valueless  will,  during  the  next  fifteen  years,  by  irri¬ 
gation,  be  made  the  most  highly  productive  land  in  the  country. 

The  United  States,  with  the  most  fertile  soil  in  the  world, 
but  with  its  wasteful,  slipshod  methods  of  seed  selection  and 
cultivation,  produces  an  average  annual  yield  of  only  four¬ 
teen  bushels  of  wheat  to  the  acre ;  whereas,  England  produces 
more  than  thirty-two  bushels  to  the  acre ;  Germany  about 
twenty-eight  bushels,  the  Netherlands  more  than  thirty-four 
bushels,  and  France  approximately  twenty  bushels. 

Of  oats,  the  United  States  produces  an  average  annual 
yield  of  23.7  bushels  per  acre,  England  42  bushels,  Germany 
46  bushels,  and  the  Netherlands  53.1  bushels  per  acre. 

The  average  yield  of  potatoes  in  the  United  States  is  85 
bushels  per  acre,  while  that  of  Germany,  Belgium  and  Great 
Britain  is  250  bushels. 

Potatoes,  like  wheat  or  bread,  are  a  food  staple  of  the 
poor  man.  Germany,  with  an  area  no  greater  than  any  one 
of  a  majority  of  our  States,  produces  approximately  two 
billion  bushels  of  potatoes,  while  the  aggregate  crop  of  the 
United  States  averages  barely  275,000,000  bushels  per  annum. 

There  is  no  other  country  with  which  we  can  compare  our 
corn  crop ;  but  I  know  from  personal  experience  that  the 
average  yield  of  the  last  ten  years,  which  is  also  the  largest 
average  yield  for  any  similar  period  in  the  history  of  our 
country,  can  be  more  than  doubled. 

Accepting  these  figures,  we  come  to  the  all  important  c[ues- 
tion  of  what  will  be  required  in  the  way  of  additional  trans¬ 
portation  facilities  to  handle  the  tremendous  and  rapidly 
increasing  business  of  the  next  fifteen  years,  and  how  those 
facilities  are  to  be  provided. 

During  the  year  1907,  the  225,000  miles  of  railroad  in  the 
United  States  were  operated  intelligently,  skilfully,  and  to 
the  very  limit  of  their  capacity ;  and  it  is  a  fact  well  known 
to  every  business  man  in  the  country  that  there  was  hardly 
a  day  during  that  year  when  it  was  possible  for  the  railroads 
(on  account  of  inadequate  facilities,  very  largely  terminal 


15 


facilities),  to  promptly  move  the  traffic.  There  were  days  and 
weeks  during  that  year  that  vessels  cleared  from  Atlantic 
ports  with  their  holds  filled  with  sand  and  gravel  for  ballast ; 
although  these  same  vessels  held  charters  for  grain  that  had 
been  sold  for  export,  but  that  the  railroads  were  unable  to 
move  from  interior  points;  and  this  in  face  of  the  fact  that 
the  railroads  were  handling  every  day,  week,  in  and  week 
out,  a  record  breaking  volume  of  business. 

Mr.  Logan  G.  McPherson,  a  special  lecturer  on  Economics 
at  Johns  Hopkins  University,  who  has  made  this  question  a 
study,  and  who  has  been  conducting  an  exhaustive  inquiry 
and  investigation  in  all  parts  of  the  country,  in  the  September 
number  of  the  Political  Science  Quarterly,  says : 

“  Speaking  broadly,  the  freight  traffic  of  this  country 
increases  about  lOO  per  cent,  every  ten  years,  and  there  is 
every  likelihood  that  it  will  increase  lOO  per  cent,  or  more 
in  the  next  ten  years,  a  period  of  depression  being  more 
than  made  up  by  a  return  of  prosperity. 

“If  provision  for  a  loo  per  cent,  increase  of  traffic 
meant  an  increase  of  loo  per  cent,  in  facilities,  the  existing 
railroad  plant  of  the  United  States  would  have  to  be 
doubled.  Let  us  assume,  however,  that  the  traffic  increased 
by  lOO  per  cent,  can  be  handled  with  facilities  increased 
by  eighty  per  cent.  Taking  the  cost  of  main  line  track  at 
$30,000  per  mile,  other  track  at  $15,000  per  mile,  locomo¬ 
tives  at  $15,000  each,  freight  cars  at  $1,000  each  and  pas¬ 
senger  cars  at  $5,000  each,  it  will  be  found  that  an  eighty 
per  cent,  increase  in  the  track  and  equipment  of  1905 
would  cost  over  eight  and  one-half  billion  dollars.  The 
requisite  real  estate  would  probably  cost  another  half 
billion  dollars,  bringing  the  total  expenditure  necessary 
to  provide  for  the  traffic  of  the  decade  ending  with  1915 
to  an  average  annual  investment  of  nine  hundred  mil¬ 
lions  of  dollars.” 

During  the  great  congestion  of  1907,  Mr.  James  J.  Hill, 
one  of  the  most  able,  far-sighted,  conservative  men  of  this 
generation,  estimated  that  it  would  require  the  expenditure 
of  one  billion  dollars  a  year  for  five  years  to  make  the  railroad 
facilities  of  the  United  States  equal  to  the  demand  they  will 
be  called  upon  to  meet. 


16 


I  do  not  regard  Mr.  Hill’s  statement  as  extravagant,  but 
reducing  it  by  half  and  applying  it  to  the  fifteen  years  covered 
by  the  estimates  for  increased  traffic  that  I  have  given,  will 
make  it  necessary  to  raise  seven  billion,  five  hundred  million 
dollars  for  the  purpose  of  increasing  and  improving  railroad 
facilities  during  the  coming  fifteen  years. 

The  West,  and  especially  the  great  Southwest,  must  have 
thousands  of  miles  of  new  railroads  to  make  possible  the 
tremendous  development  of  which  that  region  is  capable. 

Texas  alone  has  fifty-five  counties  in  which  the  whistle  of 
a  locomotive  has  never  been  heard,  and  the  State  of  Texas 
can,  with  adequate  railroad  facilities  and  proper  cultivation, 
raise  more  cotton  than  is  now  produced  in  the  United  States, 
or  double  the  annual  corn  crop  of  the  country. 

The  East  requires  little  in  the  way  of  new  railroads,  but 
does  need  and  must  have  vast  improvements  in  existing  roads, 
especially  in  their  great  Atlantic  seaboard  terminals. 

During  the  two  decades  from  1905  to  1925,  the  New  York 
Central  Railroad  will  expend  in  such  improvements  an  amount 
closely  approximating  if  it  does  not  exceed  the  original  cost 
of  the  road. 

Let  me  illustrate:  The  traffic  of  1906  and  1907  increased 
by  leaps  and  bounds  and  very  early  in  the  latter  year  the 
railroads  were  overwhelmed  with  business  far  in  excess  of 
their  capacity  to  handle  it. 

At  times,  from  four  to  six  thousand  cars  were  sidetracked 
between  Buflfalo  and  Albany,  largely  on  account  of  the  inability 
of  the  roads  east  of  the  Hudson  river  to  handle  the  business. 

During  the  year  1907  and  continuing  through  the  depression 
of  1908,  $22,733,000  has  been  spent  by  the  New  York  Central 
and  Hudson  River  Railroad  alone  in  building  additional  main 
tracks  and  providing  passing  tracks,  terminals,  and  other  neces¬ 
sary  facilities. 

'  hese  figures,  large  as  they  are,  do  not  include  the  great 
expenditures  being  made  in  the  installation  of  electricity  and 
rebuilding  the  passenger  terminal  in  New  York  City.  As  a 
result  of  these  vast  expenditures,  the  road  is  now  in  shape 


17 


'to  handle  not  only  the  tremendous  tonnage  of  1907,  but  a  very 
much  larger  tonnage  without  an  hour’s  delay. 

This  is  only  a  typical  case.  Like  situations  existed  in  all 
parts  of  the  country  and,  as  the  business  of  the  nation  expands 
and  develops,  similar  conditions  will  recur.  These  conditions 
demand,  and  will  demand  in  the  future,  the  investment  of  vast 
sums  of  money,  the  only  alternative  being  a  calamitous  limita¬ 
tion  of  the  nation’s  growth. 

This  is  the  problem  that  confronts  the  railroads,  and  every 
citizen  in  whatever  line  of  business  activity  he  may  be  engaged, 
has  a  most  vital  interest  in  its  solution. 

I  do  not  wish  to  speak  in  a  spirit  of  complaint  or  criticism ; 
but  I  want  to  ask  you  to  carefully  study  the  legislation. 
National  and  State,  that  has  been  passed  during  the  last  five 
years  in  the  so-called  regulation  of  railroads ;  regulation  that 
has  resulted  in  almost  every  instance  in  either  seriously 
reducing  revenue  or  largely  increasing  the  cost  of  operation. 

Recall  the  campaign  of  violent  agitation  and  extravagant 
unmeasured  condemnation  of  the  past  four  years.  Bear  in 
mind  that  the  average  return  on  capital  invested  in  our  rail¬ 
roads  is  about  4.4  per  cent.,  whereas  the  return  on  money 
invested  in  agriculture  (using  statistics  of  1905  as  a  basis), 
averages  about  ten  per  cent.,  in  manufacturing  over  fifteen 
per  cent.,  and  in  merchandising  and  banking  above  twenty 
per  cent.  Remember  that  everything  in  the  way  of  develop¬ 
ment  of  railroad  transportation  in  the  past  has  been  the  result 
of  the  investment  of  private  capital,  and  that  if  these  exten¬ 
sions,  enlargements,  and  improvements,  absolutely  indispens¬ 
able  to  national  growth  and  development,  are  made,  it  must 
be  by  the  further  investment  of  private  capital  by  private 
citizens,  or  that  dread  alternative  of  Government  ownership. 

Then  ask  yourselves  if  these  conditions  are  of  such  a 
character  as  to  attract  new  investors  or  to  encourage  those 
that  have  already  invested  largely  in  railroads  to  materially 
increase  their  investments. 

The  railroad  construction  of  1908  was  the  smallest  in  ten 
years,  and  that  of  1909  ])romises  to  be  less  than  1908.  Ihe 
problem  is  an  iirportant  one  and  may  well  engage  the  very 


18 


serious  consideration  of  every  citizen  interested  in  the  growth 
and  development  of  our  country. 

Mr.  Toastmaster,  the  four  great  foundation  stones  upon 
which  the  commercial  supremacy  of  this  nation  has  been 
builded,  and  upon  which  its  future  development  and  prosperity 
depend,  are  agriculture,  manufacturing,  merchandising  and 
transportation. 

I  have  placed  the  great  function  of  transportation  last,  but 
it  is  in  no  sense  least,  because  the  prosperity,  yeaj  the  very 
existence  of  the  others,  depends  upon  it. 

In  the  free,  untrammeled  rise  and  fall  of  prices  to  meet 
changing  conditions  agriculture,  manufacturing  and  merchan¬ 
dising  respond  promptly,  almost  automatically. 

The  great  business  of  transportation  alone,  subject  to,  and 
as  acutely  sensitive  to,  conditions  that  affect  cost  of  produc¬ 
tion  as  either  of  the  others,  is  hedged  about  and  restricted 
by  legislative  enactment  and  supervision  of  commissions, 
national  and  in  almost  every  State. 

Further  than  this,  every  act,  every  change  in  tariff  made 
or  suggested  by  the 'railroads  is  the  subject  of  instant  challenge 
and  investigation  by  hundreds  of  alert,  aggressive  associations 
such  as  yours. 

I  do  not  for  an  instant  question  the  right,  the  wisdom,  or 
the  necessity  for  this  supervision  and  regulation  of  railroads 
by  the  nation  or  the  State  that  creates  them. 

No  man  can  gainsay  the  right  and  duty  of  the  Albany 
Chamber  of  Commerce  or  any  kindred  organization  to  most 
minutely  scrutinize  every  change  in  rates,  classifications  or 
conditions  that  may  affect  your  interests. 

Under  our  form  of  government,  the  people  rule,  and  the 
terms  “  rule  ”  and  “  regulate  ”  are  synonymous.  The  right 
to  rule  or  regulate  carries  with  it  the  power,  if  unwisely 
exercised,  to  very  seriously  injure  the  thing  regulated.  In 
view  of  this,  should  not  the  right  to  regulate  the  railroads 
by  both  the  State  and  nation  be  exercised  in  a  spirit  of 
broadminded,  unprejudiced,  judicial  impartiality,  uninfluenced 
alike  by  the  importunities  of  great  interests  on  one  side  or 
uninformed  popular  clamor  on  the  other?  Should  not  the 


# 


19 


right  to  regulate,  the  power  to  control,  carry  with  it  the  solemn 
duty  to  protect,  in  every  proper  and  legitimate  way,  the  interest 
thus  controlled? 

No  one  of  the  four  great  cornerstones  of  this  vast  com¬ 
mercial  structure  can  be  undermined,  damaged  or  weakened 
without  injury  to  the  structure  itself.  The  interests  of  agri¬ 
culture,  manufacturing,  merchandising  and  transportation  are 
so  interwoven,  so  interdependent,  that  no  lasting  injury  can 
corne  to  one  without  permanent  injury  to  all. 

Authority  to  regulate  the  railways  of  the  country  has  been 
and  is  being  conferred  upon  national  and  State  commissions, 
limited  only  by  that  provision  of  the  Constitution  that  protects 
the  property  of  the  citizen  from  confiscation. 

Does  not  the  interest  of  every  citizen,  the  growth,  the 
development,  the  prosperity  of  the  nation,  demand  that  this 
power  be'  used  conscientiously,  with  the  most  scrupulous  con¬ 
servatism,  and  above  all,  with  the  broadest  possible  construc¬ 
tive  wisdom? 


■ '  . 


r. 


